U.S. stocks fell, extending the market’s worst weekly drop in three months, as concern bank shareholders will be wiped out by government bailouts snuffed out an afternoon recovery.

Citigroup Inc. and Bank of America Corp. declined as much as 36 percent before paring losses after CNBC reported the Treasury Department will release more details of its financial rescue plan next week. The Dow Jones Industrial Average dropped below its lowest close since 1997 earlier after Senate Banking Committee Chairman Christopher Dodd told Bloomberg Television some struggling banks may need to be taken over by the government.

The S&P500 Index decreased 0.8 percent to 772.92 at 3:17 p.m. in New York. The benchmark index is down more than 6.5 percent on the week and less than 3 percent above its 2008 bear market low. The Dow fell 62.68 points, or 0.8 percent, to 7,403.27 after earlier tumbling as much as 216 points. Europe’s benchmark index sank to a six-year low, while Japan’s Topix plunged to the lowest since 1984.

(Bloomberg.com)